The Significance of National Cultural Identity
Corporations, Globalisation and the Law series
Chapter 1: Corporate governance global economics: the neo-liberalism paradigm
This chapter discusses the neo-liberal economic paradigm from several angles. We start with the anxiety that there is a crisis of capitalism because of growing inequalities globally and within countries. We believe that the increasing convergence of corporate governance into a neo-liberal paradigm is one of the causes of growing inequality. This chapter traces the historical antecedences of neo-liberalism. We find that it is predicated on contracts which should be individually fair but unfortunately bargains are inevitably unequal because of differences between the parties. A rigid adherence to contractual rules does not allow a fair balance between parties where there are stark differences and imbalances of power or riches. The uneven playing field can only be levelled by regulation allowing ethical and communitaire ideas to flourish in corporate governance. We show where powerful neo-liberal ideas are spreading into international institutions via codes and international standards, influencing other jurisdictions. The WB and the OECD are promoters of a number of these initiatives, which are almost overwhelming the societies who wish to adhere to a stakeholder’s model of corporate governance. This is dangerous because if the contractual model of corporate governance becomes pre-eminent there will be inherent power- ful actors able to challenge democratic legitimacy. The chapter traces the history of the inherent inequality involved in contracts, back to the foundation of the contractual model of companies. A contractual model of corporate governance has allowed the flourishing of Multinational Enterprises (MNEs) which are often more powerful than national governments.
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